Cotton yarn prices used in knitwear production in Tirupur rose sharply by Rs. 10 (US $0.11) to Rs. 12 (US $0.13) per kilogram on Wednesday, marking the first day of the new fiscal year. The increase follows a sustained upward trend driven by escalating global cotton prices linked to the ongoing conflict in the Middle East.
Industry sources indicated that this latest rise comes on top of earlier increases, with yarn prices having already climbed by Rs. 7 (US $0.075) per kilogram at the end of February and a further Rs. 7 (US $0.075) per kilogram in mid-March.
Manufacturers have warned that the cumulative effect of these hikes will raise the production cost of a single knitwear garment by up to Rs. 6 (US $0.064). The development has also caused concern among exporters, who are already grappling with multiple cost pressures.
KM Subramanian, President of the Tiruppur Exporters’ Association (TEA), stated that cotton prices in the global market had risen sharply due to the war, leading to a corresponding increase in domestic prices. He noted that over the past four weeks, the price of a candy of cotton (356 kg) in India had surged from Rs. 54,000 (US $580) to Rs. 64,000 (US $687), representing an increase of approximately 20% in a short span. He attributed this escalation as the primary reason behind the rise in cotton yarn prices.
He further explained that the spiralling costs had compounded existing challenges faced by exporters, including overseas tariffs and rising prices of other raw materials. Subramanian added that exporters were already dealing with logistical difficulties in shipping finished knitwear garments, alongside broader cost pressures stemming from the geopolitical situation.
He emphasised that the increase in yarn prices would directly impact production costs, raising the cost of a single garment by up to Rs. 6 (US $0.064). However, he pointed out that exporters would be unable to pass on these additional costs to foreign buyers, as prices for current orders had already been finalised through contracts. He described the situation as an additional financial burden on the industry.
On Wednesday, prices across all varieties of cotton yarn used in knitwear production saw increases in the range of Rs. 10 (US $0.11) to Rs. 12 (US $0.13) per kilogram. For instance, the price of 20s combed yarn rose from Rs. 265 (US $2.84) to Rs. 277 (US $2.97) per kilogram.
S Saravanan, a Core Committee Member of the Tiruppur Yarn Manufacturers Association, stated that while India was currently at the end of the cotton season, there was no shortage of cotton in the country.
